Recent Posts

The 2008 financial crisis set in motion shock waves that are
still reverberating through the American, European, and global
economies, touching everything from housing to jobs to college
tuition.

In March 2009, I wrote
a piece for The Atlantic outlining the
likely effects of the crisis on America’s economic landscape.
Several years into the crisis, I wanted to look at how the crisis
might have affected the geography of finance across America.

The table below shows the nation’s leading financial centers
across four key metrics.

America’s Leading Finance Metros

Finance and Insurance Employment

Finance-Related Occupations

Finance Wages and Salaries (billions)

Finance and Insurance Output (billions)

New York

899,646

New York

477,800

New York

$40.9

New York

$214.0

Los Angeles

415,736

Los Angeles

285,440

D.C.

$23.8

Chicago

$58.3

Chicago

393,883

D.C.

281,560

Los Angeles

$21.0

Philadelphia

$54.4

Dallas

319,000

Chicago

243,500

Chicago

$17.3

Los Angeles

$45.9

Philadelphia

251,686

Dallas

154,790

Boston

$12.0

Boston

$37.1

Boston

223,139

Boston

151,290

San Francisco

$11.8

San Francisco

$27.2

Miami

204,707

Philadelphia

150,930

Dallas

$10.9

Charlotte

$26.5

Houston

188,390

Atlanta

137,430

Philadelphia

$10.9

Hartford

$24.8

San Francisco

175,294

San Francisco

135,970

Atlanta

$10.1

Minneapolis

$22.9

Phoenix

168,107

Minneapolis

115,430

Houston

$8.1

Houston

$20.5

Note on Sources: Bureau of Economic
Analysis (Columns 1 &
4), Bureau of
Labor Statistics (Columns 2 & 3). Finance
and Insurance Output is not published for Washington, D.C., for
confidentiality reasons. For the BLS data, Boston refers to the
Boston NECTA Division, not the MSA.

Greater New York is far and away the nation’s leading financial
center, topping the list in all four categories:

It had nearly half a million people employed in
finance-related jobs, nearly double that of the next largest
centers on this measure, Los Angeles, Washington, D.C., and
Chicago.

Nearly 900,000 people were employed in New
York's finance and insurance industries in 2010, up from
785,531 in 2006 — more than twice the amount of the next two
largest centers on this indicator, L.A., and Chicago.

New York's finance occupations generated roughly $40
billion in wages and salaries, almost twice the amount of the
next two centers on this variable, greater Washington,
D.C. and L.A.

New York's financial sector produced more than $200
billion in economic output, about four times that
of the next-largest financial centers on this metric,
Chicago, Philadelphia, and L.A.

The nation's other leading financial centers include L.A.,
Chicago, Boston, Philadelphia, and San Francisco (which rank
among the top ten in all four categories); Dallas and Houston
(which make the top ten rankings in three); Atlanta,
Minneapolis-St. Paul, and Washington, D.C. (which place in
the top ten in two); and Miami, Hartford, Charlotte, and Phoenix
(which make it in one each).

The first map (below) charts the share of employment in
finance and insurance establishments across U.S. metros.

Map by MPI's Zara
Matheson

Finance and insurance employment averaged nearly 6 percent of
employment across all metros. Among large metros (those with more
than one million people), Hartford, Connecticut, with its large
concentration of insurance companies, leads with roughly 11
percent of its total employment in finance and insurance firms.
Greater New York is fourth among large metros with 8.3 percent.
Somewhat surprisingly, Jacksonville, Florida (8.7
percent) and Salt Lake City, Utah (8.6 percent)
rank ahead of New York, falling in second and third
place, respectively. Dallas is fifth, Denver sixth, and
Charlotte, North Carolina, with its cluster of large banks, is
seventh among large metros. Philadelphia is 11th, Minneapolis-St.
Paul 12th, Boston 13th, Chicago 14th, Miami 18th, and
San Francisco 19th among large metros.

The second map (below) takes a different cut: It charts the share
of total regional employment composed of people who
work in all finance-related occupations,
as opposed to in finance
and insurance firms. Map by MPI's Zara
Matheson

Greater New York, surprisingly, ranks just 18th of large metros,
with 5.8 of its workforce employed in finance-related
occupations, up from 5.3 percent in 2006.

Also surprising: The top-ranked large metro in the country is
greater Washington, D.C., where finance occupations make up
nearly ten percent (9.8 percent) of total employment, up from 8
percent in 2006. Denver is second with 7.7 percent, followed by
San Francisco with 7.1 percent, and Hartford, Connecticut, with
its large concentration of insurance companies, is 10th. Boston
ranks 11th, Charlotte 14th, and Chicago 20th.

The third map, below, charts the finance sector’s share of wages
across U.S. metros.

Map by MPI's Zara
Matheson

There is substantial geographic variation: 74 metros are above
the national average and 289 metros fall below it.

Greater New York is now ninth among large metros, tied with
Baltimore, with 8.9 percent of its wages coming from the
finance-related jobs — up from 2006 when the share was 7.8
percent. The average 2011 salary for finance jobs in New York was
$85,580, up from $72,870 in 2006. This was fifth in the country
behind Bridgeport-Stamford-Norwalk, Connecticut ($95,510), San
Jose-Sunnyvale, California ($90,260), and San Francisco
($86,700).

Greater Washington, D.C., again tops the list of large metros
with 13.2 percent of its wages from finance-related occupations,
up from 11.1 percent in 2006. The average salary for
finance-related jobs in D.C. was $84,370, just slightly less than
in New York, and up from $72,290 in 2006. Next in line are
Denver, San Francisco, Richmond, and Atlanta. Charlotte is
seventh, Hartford 15th, Boston 16th, Chicago 19th, and
Philadelphia 20th among large metros.

Perhaps the most striking thing in our analysis is this: While
finance was the main force in precipitating the crisis, its share
of occupations and wages has increased in its wake. The finance
share of all U.S. occupations grew from 4.4 percent in 2006 to
4.8 percent in 2011 according to our analysis, while the finance
sector’s share of wages grew from 6.8 percent to 7.3 percent over
the same period. During this time, nearly three-quarters (73.3
percent) of U.S. metros saw their share of finance jobs grow,
while nearly 60 percent of metros saw their share of finance
wages increase. The average wages and salary for finance-related
jobs increased from $60,000 in 2006 to $68,740 in 2011.

This stands out from historical trends. Influential studies by
New York
University economist Thomas
Philippon traced the growth and decline of the U.S.
financial sector since the mid-19th century. Philippon
plotted the expansion
of the U.S. financial sector from 1860 to 2007, as it
grew from 1.1 percent of GDP in the late-19th century to four
percent in the 1970's, before hitting 8.3 percent of GDP in 2006.
A related
study [PDF] by
Philippon and the University of Virginia’s Ariell
Reshef tracked wages and skills in the financial
sector from 1909 to 2006 and found wages in the financial
sector to be "excessively high" around 1930, and again from
the mid-1990's until 2006. Philippon's research found that the
finance sector closely tracks booms and busts — its share of and
role in the U.S. economy fell back considerably in terms of its
share of the economy in the wake of major crises like the Great
Depression.

Philippon and other economists who cover the subject note that
America’s financial sector became bloated and over-blown in the
years leading up to the crisis. Instead of channeling capital
productively into the economy, the sector generated mega-profits
by moving money around in highly speculative ways. When the house
of cards came crashing down, it was thought that finance would be
brought back under control; Our economy would shift away from its
speculative "trading" orientation back to "building" up the real
economy, and the finance share of the total economy would revert
to historic norms.

But that does not appears to have happened, according to our
analysis. While our data is based on different sources than
Philippon’s, and although the crisis has not run its full course,
we find that instead of contracting, the financial sector overall
has only continued to expand since the deep economic and
financial crisis, which still reverberates through the U.S. and
global economies.